Umbrella Auto Insurance Policies: The Facts about Personal Liability Insurance

February 23, 2017

Umbrella insurance policies from your automobile and/or home insurer are also often called Personal Liability Insurance policies. They can be purchased in addition to traditional auto and home insurance policies in order to provide increased levels of financial liability protection to policyholders. For millions of Americans, umbrella insurance is a logical component of a total insurance coverage plan. Considering the ever-increasing costs associated with health care provision, auto body repair, attorney fees and more, it is understandable why so many people are choosing the additional umbrella coverage.

Purchasing umbrella insurance coverage will generally add about 10% to the rates that individuals pay for traditional automobile and homeowner’s insurance policies. In the vast majority of cases, umbrella insurance is never used. Most accidents are sufficiently covered by traditional insurance policy limits. However, in the case of an atypical tragedy where you are at fault, you’re going to be glad that you had paid $400 or $500 per year extra for personal liability insurance coverage. That’s especially true when you consider that a single vehicular accident could rack of damages, including those for loss of lives, in the millions of dollars.

Fast facts about umbrella insurance coverage:

  • Provides financial protection for automobile accidents where the costs of damages exceeds the set limits of traditional insurance policies;
  • Insures against losing your home, future earnings and existing investments due to an automobile accident that’s your fault;
  • Because personal liability insurance policies are still not mainstream, individuals can purchase them for very reasonable premiums;
  • Provides the same additional coverage limits at your home as when you are in your car;
  • Will generally add about 10% to your current premium rates;
  • Generally sold in coverage limit increments of $1 million, up to $5 million;
  • Normally have minimum deductibles of $300,000;
  • Each million dollars worth of personal liability insurance coverage will cost between $200 and $300 per year;

An example of how umbrella insurance coverage could benefit you:

Assume that you have a traditional automobile insurance policy that has $500,000 worth of liability coverage. Now assume that you have an additional one million dollars worth of umbrella insurance coverage. Your total coverage is increased to $1,500,000. If you are to become involved in an accident that is your fault, your traditional (primary) policy will be used to the cover damages first. When that traditional policy’s liability limits are reached, the umbrella insurance policy would kick in. Umbrella insurance policies are normally set with very high deductibles, generally at least $300,000. And remember, the coverage applies to the policyholder’s liability at home or in his or her vehicle.

In short, if an umbrella insurance policyholder is at fault in an accident, either at home or in a vehicle, it’s covered. With high deductibles, high liability coverage limits and surprisingly low premium rates, personal liability insurance policies continue to grow in American popularity.